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MYOB Tax Changes

Software changes and updates in the 2018 tax release

ATO Pre-fill

A walk through the new ATO Pre-fill features and workflow for I Returns

Budget Commentary

Tax highlights and summary from the 2018 Federal Budget

Support Matters

What’s changed with your support options and a look at some common tax calls

PLS Review

Overview of the how, why and when of PLS to date plus what’s next

Dates

All the important dates for your reference

Agenda

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1MYOB Tax Changes

Software changes and updates in the 2018 tax release

MYOB Tax Changes Tax Changes affecting Multiple Entity Types

Tax Changes for Individual Entities

Tax Changes for Partnership Entities

Tax Changes for Trust Entities

Tax Changes for Company Entities

Tax Changes for Superannuation and Self Managed Super Funds

Superannuation Changes From 1 July 2017

Tax Changes affecting Multiple Entity Types

Tax changes affecting multiple entity types

Temporary Budget Repair Levy Concludes

Foreign Residents Capital Gains Tax Main Residence Exemption and Principle Asset Test

Increased Capital Gains Tax Discount for Investors in Affordable Housing

Changes to Foreign Resident Capital Gains Withholding

Accelerated Depreciation for Small Business Entities further Extended

Limiting Plant and Equipment Depreciation Deductions for Residential Assets

Removal of Residential Rental Property Travel Expenses for Individuals

Vacancy Fee for Foreign Acquisition of Residential Property

Capital Gains Tax Changes to the Principle Asset Test

International Dealings Schedule

Tax Incentives for Early Stage Innovation Companies

Tax Incentives for Early Stage Venture Capital Limited Partnerships

Junior Minerals Exploration Incentive

Country by Country Reporting - Phase 2

Diverted Profits Tax

Treasury Laws Amendment (Temporary Budget Repair Levy) Act 2014 - received Royal Assent 25 June 2014

The application of the Temporary Budget Repair Levy (TBRL) ceased to apply after 30 Jun 2017

The 2017-18 assessment year will therefore no longer include the additional 2% TBRL for incomes exceeding $180,000

MYOB Tax has been updated to remove the TBRL component from the associated tax calculations

These changes include removal of the:

TBRL information for Individuals in the Medicare schedule

TBRL information for Trusts where the Trustee was liable under S99A

TBRL notes for Companies in the Company Tax Rates

TBRL notes for Superannuation Funds and SMSFs in the Superannuation Fund Tax Rates

Temporary Budget

Repair Levy Concludes

Forms affected - I T C F MS

Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 2) Bill 2017 - Second Reading 19 March 2018

Denies Capital Gains Tax (CGT) Main Residence Exemption for foreign tax residents

Measure applies from 9 May 2017 (7:30pm AEST)

Existing properties grandfathered until 30 June 2019

Foreign residents disposing of property after 9 May 2017 must determine CGT liability and comply with CGT withholding rules

Foreign resident beneficiaries of Resident Deceased Estates will be entitled to an apportionment of CGT

Transitional arrangements apply to previously lodged Foreign Resident returns providing the tax payer reviews their CGT obligations in a “reasonable time frame”

Foreign Residents Capital

Gains Tax Main Residence

Exemption and Principle

Asset Test

Forms affected - I T


Provides an additional 10% Capital Gains Tax (CGT) discount to resident individuals investing in qualifying affordable housing Increases CGT discount rate up to 60% from 50%

Also applies to affordable housing investments by a Managed Investment Trust (MIT) with discount distributed to resident individuals

Qualifying affordable housing must be: Provided at below market rent Made available to eligible tenants on low to moderate household incomes Managed through a registered community housing provider For a minimum investment period of three years

If this bill is passed MYOB Tax will be amended to include a new Affordable housing daysfield in the Capital Gains Item worksheet

Increased Capital Gains Tax Discount for Investors in Affordable

Housing

Forms affected - I T (g)

Treasury Laws Amendment (Foreign Resident Capital Gains Withholding Payments) Act 2017 - received Royal Assent 22 June 2017

Implements measures announced in the 2017 Federal Budget to extend Foreign Resident Capital Gains Withholding (FRCGW) obligations on asset disposals Reduces the threshold for real property interests down to $750,000 (from $2m) Increases the withholding rate up to 12.5% (increase from 10%)

Applies to contracts entered into on or after 1 July 2017

Changes to existing withholding obligations regime on asset disposals mainly affecting land, buildings, residential and commercial property sales

Withholding can be avoided for Australian Resident Vendors as follows: Real Property - ATO Clearance Certificate (by settlement date) Other Asset Types - Vendor Declaration

Likewise Foreign Resident Vendors may apply for a rate variation or make an Australian real property asset declaration

Changes to Foreign Resident

Capital Gains Withholding

No changes to MYOB Tax for 2017-18 - information only

Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Act 2017 - received Royal Assent 22 June 2017

Extension of the Small Business Entity (SBE) instant asset write-off regime up to 30 June 2018 for assets less than $20,000

SBE Eligibility Criteria - covers over 98% of Australian Businesses

Annual turnover less than $10m

Turnover is aggregated

Note these SBE measures:

Mandates that all SBE assets be handled under the Simplified Depreciation Rules

Provides for instant write-off of Small Business Pool balances less than $20,000

Limits assets subject to accelerated depreciation are less than $20,000

Additional details in the Budget Commentary

No changes to MYOB Tax - Depreciation Worksheet calculations remain unchanged

Accelerated Depreciation for Small Business Entities further

Extended


Treasury Laws Amendment (Housing Tax Integrity) Act 2017 - received Royal Assent 30 November 2017

Depreciation deductions on previously used plant and equipment for residential rental properties are now no longer claimable

Applies to assets acquired at or after 9 May 2017 (7:30pm AEST)

Effectively stops depreciation double dipping resulting from property purchase asset revaluation activities

Depreciation treatment for purchases of additional new plant and equipment assets remains unchanged

The measures specifically targets Rental Property ownership by Individual tax payers or Personal Structures. For example, SMSF or Trust

Excludes Individuals (and Personal Structures) genuinely carrying on a rental property business

Transfers of new and renovated property are excluded if no depreciation has been previously claimed. For example, developer sales

Limiting Plant and Equipment

Depreciation Deductions

for Residential Assets

Forms affected - I P T MS (ren) (d)

Limiting Plant and Equipment

Depreciation Deductions

for Residential Assets

Forms affected - I P T MS (ren) (d)

Reminder text box added to Rental Property Schedule

Information text and new Y/N field (to nominate deduction status) added to Depreciation Worksheet

New non-deductible depreciation summary line

Treasury Laws Amendment (Housing Tax Integrity) Act 2017 - received Royal Assent 30 November 2017

Individual Travel Expenses for any residential rental property purposes are no longer claimable

Travel expenses can still be claimed:

If carrying a business of property investment

For commercial investment properties

By excluded entities (for example, company, super fund, public unit trust)

ATO commentary:

Owning several properties is not generally considered a rental property business

The receipt of rental payments does not constitute a rental property business

Travel expenses are still excluded from the capital gains calculation cost base

There are no changes to MYOB Tax because rental travel deductions are claimable in some situations

Removal of Residential

Rental Property Travel Expenses for Individuals


Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Act 2017 - received Royal Assent 30 November 2017

Applies to foreign owners of unoccupied residential property or residential property not genuinely available for rent

Genuine availability is determined by rental market access for at least 183 days in a vacancy year on at least 30 day terms

Each vacancy year starts with the owners occupancy day anniversary (for example, settlement)

Vacancy fees are $5,500 up to $1m with specific calculated values above that

Applies to Foreign Investment Review Board (FIRB) applications after 9 May 2017(7:30pm AEST)

Ownership is widely defined to cover Companies, Partnerships and Trusts with substantial foreign interests. For example, > 20% foreign ownership

Foreign owners are required to report annually to the Commissioner of Taxation

Mandatory reporting based on individual residential property

Must be submitted within 30 days of the end of the vacancy year

The ATO will advise any applicable (Ghost Tax) vacancy fees

Vacancy Fee for Foreign

Acquisitions of Residential

Property



Provides for the application of the Principal Assets Test on an associate inclusive basis from 9 May 2017 (7:30pm AEST)

Ensures that Foreign Tax Residents cannot avoid Capital Gains Tax (CGT) by separation of indirect interests in Australian real property

Each individual related business interest will be separately assessed as to whether the assets are principally Taxable Australian Real Property (TARP)

The separate associated interests will then be aggregated to satisfy the 10% total participation interest test for CGT

ATO Administrative Treatment

Returns may continue to be lodged until the proposal is passed into law

Tax payers need to review their tax position once passed and lodge amendments as appropriate in a “reasonable time frame”

No tax shortfall penalties will be applied and any interest accrued will be remitted

Capital Gains Tax

Changes to the Principal

Asset Test


Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 - received Royal Assent 11 December 2015

Diverted Profits Tax Act 2017 - received Royal Assent 4 April 2017

Hybrid Mismatch Legislation - currently at Exposure Draft 7 March 2018

The Government has addressed concern regarding multinationals shifting profits out of Australia using associated foreign entities

This business strategy is being addressed with Diverted Profits Tax (DPT) and Base Erosion Profit Sharing (BEPS) legislation

Broad suite of international measures to combat tax avoidance in line with OECD initiatives

The International Dealings Schedule (IDS) provides focus on these tax avoidance activities by multinationals

The IDS changes are designed to provide global substance and transparency for future compliance risk modelling and analysis

The MYOB Tax IDS schedule has several new and altered labels for 2018

International Dealings Schedule

Forms affected - P T C (ids)

Changes to the International Dealings Schedule (IDS)

Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 - received Royal Assent 5 May 2016

Treasury Laws Amendment (2017 Measures No 1) Act 2017 - received Royal Assent 4 April 2017

Provides concessional tax treatment for newly issued shares in qualifying Early Stage Innovation Companies (ESIC) with high growth potential by ‘Angel Investors’

Eligible high-wealth investors qualify as a sophisticated investor otherwise they are a retail (non-sophisticated) investorTax Incentives

for Early Stage Innovation Companies


NO

TE ESICs must provide the Commissioner information about their investors within 31 days after the end of the financial year

Investments in Early Stage Innovation Companies (ESIC) may be eligible for a non-refundable tax offset of 20% and modified Capital Gains Tax (CGT)

Separate non-refundable tax offset limits and CGT concessions apply to sophisticated and retail investors

MYOB Tax 2017 included changes to enable initial claim of the offset

MYOB Tax 2018 will also:

Include carried forward tax offsets and pre-populate where appropriate

Apply modified CGT treatment in relation to qualifying shares

Pre-fill the tax offset from the ESIC reportTax Incentives for Early Stage

Innovation Companies


Tax Laws Amendment (Tax Incentives for Innovation) Act 2016 - received Royal Assent 5 May 2016

Treasury Laws Amendment (2017 Measures No 1) Act 2017 - received Royal Assent 4 April 2017

Investments by a limited partner in an Early Stage Venture Capital Limited Partnership (ESVCLP) may be eligible for a non-refundable tax offset of 10% and modified Capital Gains Tax (CGT)

Measures also increase the ESVCLP fund size from $100m up to $200m and allows a wider range of investment activities

Tax Incentives for Early Stage Venture Capital

Limited Partnerships


Tax Incentives for Early Stage Innovation Companies (ESIC) and Venture Capital Limited Partnerships (ESVCLP)

Labels for capturing ESIC and ESVCLP tax offsets

Individual

Item T8 Label K ESVCLP

Item T8 Label M ESVCLP

Item T9 Label L ESIC

Item T9 Label O ESIC

Company

Item 22 Label L ESVCLP

Item 22 Label P ESVCLP

Item 23 Label M ESIC

Item 23 Label R ESIC

Fund & SMSF Calculation statement:

Label D1 ESVCLP

Label D2 ESVCLP (Reassigned from 2017 ESIC use)

Label D3 ESIC

Label D4 ESIC

Label D Non-refundable non-carry forward tax offsets (D1 + D2 + D3 + D4)

Trusts

Item 52 Label H ESVCLP (Reassigned from 2017 Total Offset use)

Item 52 Label I ESIC

Item 55 Label T ESVCLP (Reassigned from 2017 Total Offset use)

Item 55 Label K ESVCLP

Item 55 Label J ESIC

Item 55 Label M ESIC

Label T Beneficiary Distribution statement worksheet ESVCLP (Reassigned from 2017 Total Offset use)

Label J Beneficiary Distribution statement worksheet ESIC

PartnershipItem 51 New quick access links to ESIC & ESVCLP worksheets

Partners Distribution statement worksheet Two new fields to manage distribution to Partners

NO

TE Exploration companies have to seek JMEI approval by electronic application to the ATO and there are associated reporting requirements

Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017 - received Royal Assent 4 April 2017

The Junior Minerals Exploration Incentive (JMEI) provides a tax incentive for investment in small mineral exploration companies

JMEI replaces the Exploration Development Incentive that ceased on 30 June 2017

The Government has set an annual exploration credit cap over the next four years totaling $100m and allocation is on a first-come first-served basis

Eligible exploration companies can issue a tax credit portion to investors from their own tax losses associated with greenfield mineral exploration

Tax credits can only be issued against new shares in that income year

These issued credits reduce the companies carried-forward losses

Companies are liable for excess exploration credit tax and shortfall interest

Australian Resident shareholders will be entitled to a refundable tax offset

Note: Companies will receive franking credits and distribute these to shareholders

Junior Minerals Exploration

Incentive

Forms affected - I P T C F MS

NO

TE

MYOB Tax provides for relevant data capture in the International Dealings Schedule (IDS) but does not currently cover the preparation or lodgment of the CbC Report and associated files

Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 - received Royal Assent 11 December 2015

Country-by-Country (CbC) Reporting is part of the broad suite of measures to combat international tax avoidance by more comprehensive exchanges of information between countries

These measures also provide revised standards for transfer pricing documentation

CbC reporting implements Action 13 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Action Plan

Applies to Significant Global Entities (SGE) and consolidated groups with annual incomes of A$1 Billion or more

Essentially requires higher levels of disclosure encompassing CbC report, master file and local file being lodged within 12 months of the end of their income year

Australian entities falling under the CbC reporting regime generally require local file lodging requirement as part of a consolidated group

Country by Country Reporting

Phase 2

Forms affected - I P T C F MS

Treasury Laws Amendment (Combating Multinational Tax Avoidance) Act 2017 -received Royal Assent on 4 April 2017

Measures designed to provide the ATO with extended powers dealing with tax payers transferring profits to related parties offshore using contrived arrangements to avoid Australian Tax

Part of the package design to tackle multinational tax avoidance

Also addresses the issue of providing timely information for resolution of tax disputes

Diverted Profits Tax (DPT) imposes a penalty rate of 40%

The DPT assessment process imposes liability at assessment, requires upfront payment and requires the tax payer to substantiate non-liability

Essentially - you are guilty until you prove otherwise!!!

DPT only applies to Significant Global Entities (SGE) for income years starting 1 July 2017 or when the tax benefit occurs after this date

Australian Income must be > $25m

Sufficient Foreign Tax Test and Sufficient Economic Substance Test exemptions apply

Diverted Profits Tax


Tax Changes for Individual Entities

Tax Changes for Individual Entities Medicare Levy Low-Income Threshold Increase

Temporary Budget Repair Levy Fringe Benefit Tax Changes - FBT Rate Sunset

Fringe Benefit Tax Changes and Income Tests for Tax Offsets

Allocation of PAYG Credits and Payments Received against Overseas Repayment Levies

Cost of Managing Tax Affairs - New Reporting Requirements

Tax Deductions for Personal Superannuation Contributions

Tax Offset for Spouse Contributions - Increase in Income Threshold

Transfer Balance Cap

Transfer Balance Cap - Defined Benefit Income Stream

Taxable Government Grants and Specified Payments Reporting

In line with inflation the Medicare Levy Low-Income Thresholds have been increased for the 2017-18 income year

The threshold values for 2017-18 are as follows:

MYOB Tax has been updated to reflect the new threshold calculation values

Increased to: Up from:

Singles $21,980 $21,655

Couples (Family) $37,089 $36,541

Dependent Child $3,406 $3,356

Single Seniors and Pensioners (SAPTO) $34,758 $34,244

Marries Seniors and Pensioners $48,385 $47,670

Medicare Levy Low-Income

ThresholdIncrease

Forms affected - I (mlv)

Tax Laws Amendment (Temporary Budget Repair Levy) Act 2014 -received Royal Assent on 25 June 2014

Fringe Benefits Tax Amendment (Temporary Budget Repair Levy) Act 2014 - received Royal Assent on 25 June 2014

The application of the Temporary Budget Repair Levy (TBRL) ceased to apply after 30 June 2017 and the 2017-18 assessment year will therefore no longer include the additional 2% TBRL for incomes exceeding $180,000

Under the TBRL regime there was also an additional 2% applied to Fringe Benefits Tax starting on 1 April 2015 up until 31 March 2017

MYOB Tax has been updated to reverse the FBT increase and restore the rate to 47% for all calculations

Temporary Budget Repair

Levy Fringe Benefit Tax

Related ChangesFringe Benefit

Tax Rate Sunset

Forms affected - I

Budget Savings (Omnibus) Act 2016 : Schedule 15 Fringe Benefits - received Royal Assent on 16 September 2016

Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent on 29 November 2016

From 1 July 2017 removes the Reportable Fringe Benefits Amounts (RFBA) adjustment (49%) from the calculation of Adjusted Taxable Income (ATI)

ATI is used in the calculation of many entitlements including:

Net Medical Expenses Tax Offset (NMETO)

Dependent (Invalid and Invalid Carer) Tax Offset (DICTO)

Low-Income Superannuation Tax Offset (LISTO)

Dependent Child for Medicare Levy purposes

Also removes RFBA adjustment from the calculation of ‘Rebate Income’ used to determine eligibility for Seniors and Pensioners Tax Offsets

There is no change to RFBA treatment for benefits received from employers who are exempt from Fringe Benefits Tax (FBT) under Section 57A of the FBT Assessment Act 1986. For example, hospitals

Fringe Benefit Tax Changes and Income Tests for Tax

Offsets

Forms affected - I

Education Legislation Amendment (Overseas Debt Recovery) Act 2015 and the Student Loans (Overseas Debtors Repayment Levy) Act 2015 - received Royal Assent on 26 November 2015

These Acts provided for the recovery of Higher Education Loan Program (HELP) and Trade Support Loans (TSL) repayments from debtors residing overseas

Essentially these Acts imposed the same repayment obligations on Australians living overseas as applied to those living locally

Overseas debtors are required to register contact details with the ATO

Section 8AAZLD of the Tax Administration Act 1953 stipulates that Pay As You Go Withholding (PAYGW) credits are applied against income contingent loans amounts before being applied against other non-Running Balance Account (RBA) amounts (which includes income tax)

Accordingly the ATO will apply payments from overseas debtors against any HELP or TSL loan repayment commitments before payment of any other tax obligations

Allocation of PAYG Credits

and Payments Received against

Overseas Repayment

Levies


Cost of Managing Tax Affairs

Individuals claim the Cost of Managing Tax Affairs at label D10

Label D10 records a range of claimable amounts

To provide a more accurate breakdown the ATO have split label D10 into three sub-components

N - Interest charged by the ATO

L - Litigation costs

M - Other expenses incurred in managing your tax affairs

Forms affected - I

As a corresponding change the ATO have also revised the ‘Other income’ item 24 by splitting the ‘Category 1 income’ label

Y - Category 1 income

X - Category 2 income (ATO interest)

V - Category 3 income

Other Income

Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 - received Royal Assent 29 November 2016

Removes the 10% salary and wages income rule for an Income Tax Deduction for Personal Superannuation Contributions to eligible funds

Effective from 1 July 2017 and applies to most Australians under 75

Tax payers aged 65 to 74 will need to meet the Work Test

Contributions are included in the individual’s Concessional Contributions Cap (CC)Note: the Concessional Cap has been reduced to $25,000 from 1 July 2017

Contributions are subject to 15% contributions tax

Individuals are still required to lodge a Notice of Intention (NOI) to claim the deduction with their fund before lodging their tax return

Can only claim a deduction for the amount on the NOI

Contributions by members to certain schemes and funds are not eligible For example, a Constitutionally Protected Fund (CPF)

MYOB Tax has been updated to remove the 10% Salary and Wages Income Rule confirmation field on the Personal superannuation contributions worksheet

Tax Deductions for Personal

Superannuation Contributions

Forms affected - I (psc)


Increases the Income Threshold for Spousal Contributions up to $37,000

Effective from 1 July 2017 (Increase from previous $10,800 threshold)

Applies to super contributions for any married or de facto spouse

Provides for an 18% tax offset of up to $540 (Maximum $3,000 Contribution)

Tax payers aged 65 to 74 will need to meet the Work Test

Contributions are included in the individual’s Concessional Contributions Cap (CC)Note: the Concessional Cap has been reduced to $25,000 from 1 July 2017

Contributions are subject to 15% contributions tax

The offset is not claimable when the spouse receiving the contribution:

Exceeded their Non-concessional Contributions Cap (NCC) for the relevant financial year

Has a Total Superannuation Balance (TSB) that is equal to or exceeds the General Transfer Balance Cap ($1.6m for 2017-18) before the start of the financial year

The MYOB Tax internal calculation base has been changed for Item T3 Super Contributions on behalf of your spouse and additional information has been added to the Spouse Superannuation Contributions (ssc) schedule regarding eligibility criteria

Tax Offset for Spouse

ContributionsIncrease in

Income Threshold

Forms affected - I (ssc)

Forms affected - I (ssc)

Tax Offset for Spouse ContributionsIncrease in Income Threshold

New conditions regarding eligibility criteria for Item T3 Superannuation contributions on behalf of your spouse


Places a cap on the amounts that can be transferred from concessionally taxed accumulation accounts to a tax-free retirement account

Effectivity limits the ability of high wealth retirees to pursue earnings tax exemptions

Measure is effective from 1 July 2017

The cap is $1.6m for the 2017-18 financial year

The cap will be indexed in $100,000 increments in line with the Consumer Price Index Increment indexation at current CPI would be around 5 years

Individuals exceeding the Transfer Balance Cap will generally need to commute the excess amount back to accumulation

The ATO will advise and crystallise the excess transfer amount

The ATO Default Commutation Notice advises the voluntary commutation date (60 days) and the superannuation funds they will send Commutation Authorities to in the case of non-compliance

Excess Transfer Balance Tax will apply on the transfer balance earnings for the period when the cap was exceeded

Excess transfer balance earnings are calculated on a notional basis and willcompound daily

TransferBalance Cap

Forms affected - I (pen)

REF ATO Guidance note for Super - 5 (JS 38724-5)

ATO Web Site - Transfer Balance Cap (QC 50880)

If the taxpayer receives a Defined Benefit Income Stream they have to determine the overall value of their Defined Benefit Income Stream

This calculation is the lifetime special value of the defined benefit stream

The taxpayer needs to calculate whether the Defined Benefit Income Stream fits within the $1.6m Transfer Balance Cap (TBC) and if not subsequent tax treatments will apply from 1 July 2017

A Defined Benefit Income Stream Cap of $100,000 will apply for 2017-18

This cap will also be subject to the same indexation regime as the general TBC

When the Defined Benefit Income Stream exceeds the $100,000 Cap

Taxpayers with mixed income streams can commute account based income amounts back into accumulation or withdraw lump sum payments

The excess value of the income stream(s) will be treated as taxable income but is subject to further concessional arrangements

TransferBalance Cap

Defined Benefit Income Stream


Transfer Balance CapDefined Benefit Income Stream

NO

TE ATO Guidance note for Super - 5 (JS 38724-5)ATO Web Site - Transfer Balance Cap (QC 50880)

The following tax arrangements apply when the Defined Benefit Income Stream exceeds the $100,000 Cap

50% of the tax-free component plus the tax element above the cap is taxed at marginal rates

The tax offset for untaxed defined benefit income is limited to the taxpayer cap

The untaxed portion will be applied before the taxed source

Tax payers turning 60 will have apportioned caps for that year

MYOB Tax has two changes:

A new Label M Assessable amount from capped defined benefit income stream at item 7 Australian annuities and superannuation income streams

Additional instructions in the Tax offset worksheet at Item T2 Australian superannuation income stream


NO

TE

The ‘Import from Tax Office Pre-filled Report’ option in MYOB Tax 2018 has been updated to import these transactions at Item 24 Other Income Label V Category 3 Income Code D Taxable Scholarship/Bursaries etc.

Tax Administration Act 1953 - Schedule 1 Subdivision 396-B

The Tax Administration Act covers the reporting of government grants and payments

While this is not new, additional third-party reporting legislation now requires that government entities report on some grants and payments

This reporting includes grants paid to third party entities with an ABN and payments for the supply of services

Transactions for the first reporting period 1 July 2017 to 30 June 2018 must be lodged by 28 August 2018

This data will be available on the ATO Pre-fill Report

Taxable Government Grants and Specified Payments Reporting

Forms affected - I (oly)

No partnership changes for tax 2018


No trust changesfor tax 2018


Tax Changes for Company Entities

Tax Changes for Company Entities Tax Rate Reduction for Companies

who qualify as Base Rate Entities

Extension of Tax Rate Reduction for Companies

Tax Rate Reductions for Companies - Franking Credits

Treasury Laws Amendment (Enterprise Tax Plan) Act 2017 - received Royal Assent 19 May 2017

Provides for a reduction in the corporate tax rate to 27.5% (down from 30%) for entities with an aggregated turnover of less than:

$25m for the 2017-18 income year

$50m for the 2018-19 income year

Companies self-assess their eligibility for the lower corporate tax rate

Company entities eligible for this lower corporate tax rate will be known as a Base Rate Entity (BRE)

There is the possible impact of substituted accounting periods

The corporate tax rate will be further reduced for BREs as follows:

2024-25 Income year - 27%



MYOB Tax contains changes to forms, rates, calculations and tests

Tax Rate Reduction

for Companies who qualify as Base Rate

Entities

Forms affected - C

Treasury Laws Amendment (Enterprise Tax Plan Base Rate Entities) Bill 2017 - Senate first reading 12 February 2018

This bill has not yet been passed and current expectation is that it will be passed into law sometime in June 2018

The bill will modify the requirements to qualify as a base rate entity

Replaces the existing business test with a passive income test

Passive income includes items such as interest, royalties, rent, non-portfolio dividends, net capital gains, non-share dividends and income arising from Partnerships or Trusts that is predominately passive

Companies with greater than an 80% passive income will not be eligible for the lower corporate tax rates

In general the following entities will still be considered to be BREs:

Non-profit companies

Pooled Development Funds

Retirement savings account providers

Public trading trusts

Tax Rate Reduction

for Companieswho qualify as Base Rate

Entities

Forms affected - C

Treasury Laws Amendment (Enterprise Tax Plan 2) Bill 2017 - Senate first reading 12 February 2018

Provides for the extension of corporate tax rate reductions to all corporate entities

This bill has not yet been passed and current expectation is that there will be vigorous opposition raised in the Senate

If the bill is passed in its current form this would result in the following corporate tax rates being applicable:

Income Year Tax Rate Complying Condition

2019-20 27.5% $100m aggregate turnover

2020-21 27.5% under $250m aggregate turnover

2021-22 27.5% under $500m aggregate turnover

2023-24 27.5% under $1,000m aggregate turnover

2024-25 27% -

2025-26 26% -

2026-27 25% -

Extension of Tax Rate

Reduction for Companies

Forms affected - C

NO

TE

Practical Compliance Guide PGC 2017/D7 covers the situation whereby distributions have been issued based on an incorrect franking rate - shareholders have to be advised who may then need to file amended returns

The maximum Franking Credit that can be allocated to a Corporate FrankableDistribution will be based on that entity’s applicable Corporate Tax Rate for Imputation Purposes (CTRFIP)

Simply the company must frank their distributions for the current year on the assumption that their current year income will be the same as the previous year

So for the 2017-18 income year the Corporate Tax Rate for Imputation Purposes will be:

27.5% - if the company met the Base Rate Entity requirements for the prior 2016-17 income year, or the company is a Base Rate Entity in its first year of business

This may mean that the company has a current corporate tax rate of 30% but a Franking Credit Rate for Imputation Purposes of 27.5%

30% - for all other companies

Tax RateReduction for Companies

Franking Credits

Forms affected - C

Tax Rate reduction for Companies that qualify as Base Rate Entities (BRE)

Tax Changes for Superannuation & Self Managed Super Funds

Tax Changes for Superannuation & Self Managed Super Funds

Strengthening the Integrity of Income Streams

Removing the Existing Anti-detriment Provisions

Total Superannuation Balance

Transfer Balance Cap - Capital Gains Tax Relief

Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 -received Royal Assent 29 November 2016

Treasury Laws Amendment (2017 Measures No 2) Act 2017 Superannuation Reform Package Amending Provisions - received Royal Assent 22 June 2017

Transitions to Retirement Income Streams (TRIS) allow people to who have reached their preservation age to access their superannuation benefits without having to retire or leave their jobs

TRIS was intended to allow older workers to transition to retirement

Reduced working hours being supplemented by the superannuation income stream

The TRIS payments are generally subject to Exempt Current Pension Income (ECPI)

However, TRIS has often been used by the taxpayer to simply continue working and avoid tax

The government will remove the TRIS tax advantages and retain the original transitional retirement benefits


Forms affected - F MS (xF)

As at 1 July 2017 these changes include:

Removal of the tax-exempt status of asset income for TRIS accounts not in retirement phase -such income will be taxed at 15%.

Removal of tax-free treatment for lump sum superannuation income stream payments.

Lump sum payments will not count towards an individual’s annual minimum pension payments.

All commutations of superannuation income streams will be treated as lump sums.

Superannuation Funds and SMSFs need to ensure that TRIS payments being accessed by the tax payer meet the general TRIS legislative intent

Need to clearly identify the change between fund accumulation and retirement phases.

Treat costs as deductible where the TRIS is not eligible for transitional purposes.

Identify and report to the ATO all TRIS accounts in accumulation phase.

MYOB Tax contains several changes as follows:

Fund Return (F) - Section B Label Y (instructional changes)

SMSF Return (MS) - Section A : Q10 (instructional changes)

SMSF Return (MS) - Section B Label Y (instructional changes)

SMSF Return (MS) - Sections F & G Member and supplementary member information –New field to record the number of TRIS accounts in accumulation phase


Forms affected - F MS (xF)


This measure commenced on 1 July 2017 and the change removes the existing anti-detriment provision to ensure a consistent treatment of lump sum death benefits across all superannuation

Anti-detriment provisions provided options for a fund to claim a tax deduction for additional payments to eligible dependents on the death of a member

These additional payments could refund the 15% contributions tax paid by the deceased member over their lifetime

The Act provides for a two-year transitional period up to 30 July 2019

MYOB Tax contains instructional changes as follows:

Fund Return (F) - Section C

SMSF Return (MS) - Section G

Removing the Existing

Anti-detriment Provisions

Forms affected - F MS


The Total Superannuation Balance (TSB) is the fund balance as at 30 June reported each financial year

There are multiple superannuation changes dependent on the individual’s TSB

From 1 July 2017 the TSB will be used to determine eligibility for:

the unused concessional contributions cap carry-forward

the non-concessional contributions cap and the two or three-year bring forward period

the government co-contribution

The tax offset for spouse contributions

SMSF (or small APRA funds) to determine use of the segregated assets method to calculate exempt current pension income

Forms affected - MS (xF)

Total Superannuation

Balance

Total Superannuation Balance

There are no changes to MYOB Tax for Fund Returns (F) but the SMSF Return (MS) has additional labels to calculate the TSB correctly

SMSF - Section F and G: Member Supplementary member information

Label S1 - Accumulation phase account balance

Label S2 - Retirement phase account balance (Non-capped defined benefit income)

Label S3 - Retirement phase account balance (Capped defined benefit income)

Label X1 - Accumulation phase value

Lebel X2 - Retirement phase value

Analysis labels S1 + S2 + S3 must equal Label S -Closing Account Balance

Labels X1 & X2 are optionally completed if the mandatory fields aren’t equal to the accumulation and retirement phase values

Forms affected - MS (xF)


The introduction of the Transfer Balance Cap (TBC) effective from 1 July 2017 ($1.6m for 2017-18) affects Individual Returns (I) for 2017-18

In complying with Transfer Balance Cap provisions superannuation funds would have been liable to a capital gains event and Capital Gains Tax (CGT) relief was available for one (1) year in some circumstances

Funds utilising the CGT relief were required to notify the Commissioner by lodging a 2016-17 CGT Schedule prior to lodging their 2016-17 tax return

Where a fund has so notified the Commissioner, they now need to report that for 2017-18 the deferred notional gain has been realised

MYOB Tax has been changed as follows:

BW Schedule Item 8Remove label F Capital gains deferred due to CGT reliefRemove label G Capital gain amount deferred

CGT Schedule Item 1 Add label S Amount of capital gain previously deferred undertransitional CGT relief for superannuation funds

Forms affected - F MS (bw) (cgt)

Transfer Balance CapCapital Gains

Tax Relief

Superannuation Changes from 1 July 2017

Superannuation Changes from 1 July 2017

Concessional Contributions Cap

Non-concessional Contributions Cap

Five Year Carry Forward of Concessional Contributions Cap

First Home Super Saver Scheme

Division 293 Threshold Reduction

Streamlining Superannuation Release Authorities

Innovative Retirement Income Stream Products


The annual concessional contributions cap on pre-tax superannuation contributions will be reduced down to $25,000 (from $30,000 or $35,000) for the 2017-18 year

The differential age based cap treatment has been removed

All Defined Benefit Contributions for members of a Defined Benefit Fund (DBF) will be included in the cap from the 2017-18 year onwards

MYOB Tax calculations have been updated to reflect these Concessional Contribution Cap changes

Fund managers should note the changed reporting requirements for:

Member Contribution Statements (MCS)

Transfer Balance Report (TBAR)

Member Account Attribution Service (MAAS)

New Streamlined Release Authorities cover the release process of amounts from superannuation funds for concessional contributions

Concessional Contributions Cap Reduction

Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 - received Royal Assent 29 November 2016

The annual con-concessional contributions cap will be reduced down to $100,000 (from $180,000) for the 2017-18 year

Non-concessional contributions for Individuals with a Total Superannuation Balance (TSB) of more that the General Transfer Balance Cap ($1.6m for 2017-18) will be in excess

Individuals under age 65 can generally bring forward 2 years of non-concessional contributions ($300,000 over 3 years)

The TSB on the day prior to the period will determine the bring forward amount

TSB above $1.5m - no bring forward

TSB above $1.4m - bring forward limited to $200,000 over 2 years

There are no changes to MYOB Tax

The new Streamlined Release Authorities also cover the release process of amounts from superannuation funds for non-concessional contributions

Non-Concessional Contributions Cap Reduction


From 1 July 2018 individuals with a Total Superannuation Balance less than $500,000 can make catch-up concessional contributions

They can access their unused Concessional Contribution Cap for a period of Five (5) Years

Any unused concessional contribution cap will expire after 5 years

The 2019-20 financial year will be the first period in which an Individuals concessional contribution cap can be extended by accessing previously unused concessional contributions


Five Year Carry Forward of

Concessional Contributions Cap

Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 1) Act 2017 - received Royal Assent 13 December 2017

First Home Super Saver Tax Act 2017 - received Royal Assent 13 December 2017

The First Home Super Saver Scheme (FHSS) enables taxpayers to save for a first home deposit within their superannuation fund

FHSS enables taxpayers to save using the concessional tax superannuation regime

Scheme eligibility is taxpayer based - therefore relationship status has no impact

From 1 July 2017 a taxpayer can make voluntary contributions into their superannuation fund under the following conditions:

Concessional contributions (including salary sacrifice) - taxed at 15%

Non-concessional contributions

all contributions are subject to existing superannuation contribution caps

Contributions can be made to multiple funds

Contributions to defined benefit funds or constitutionally protected funds are not eligible for FHSS

Note: FHSS is a scheme to access funds and not an account

First Home Super Saver

Scheme

From 1 July 2018 the voluntary contributions together with the associated earnings can be released to assist with the purchase of a first home

First Home Super Saver Scheme (FHSS) releases are based on application and are subject to the following:

the maximum FHSS release amount outlined in the FHSS determination

there is a limit of $15,000 against contributions for any one year (together with earnings)

the maximum FHSS withdrawal is $30,000 (together with earnings)

First In - First Out processing and non-concessional contributions take precedence

a single FHSS release application restriction

FHSS releases are subject to ATO withholding and will be taxed at the taxpayers marginal rate (including Medicare) less a 30% tax offset

a catch for some taxpayers may be the allocation of FHSS funds against other Commonwealth debt before release

an ATO service processing time of up to 12 working days will apply

the fund may also apply additional fees or changes

a FHSS release does not affect the calculation of concessional or non-concessional contributions for cap determination purposes for the relevant year

unused FHSS release amounts must be repaid and are subject to a 20% FHSS tax


First Home Super Saver

Scheme


From 1 July 2017 the Division 293 income threshold for the 2017-18 year has been reduced to $250,0000 (down from $300,000)

High-Income Earners pay tax on their concessional superannuation contributions at 30% above this threshold

The MYOB Tax calculations have been changed to reflect the new threshold value

Division 293 ThresholdReduction


The ATO have introduced additional streamlining of Superannuation Release Authorities with electronic forms processing on the portal

Essentially these changes move processing to a single combined approach and have a variable implementation impact

2013-14 Financial year onwards

Excess concessional contributions determinations and amended determinations

Excess non-concessional contributions determinations and amended determinations

Excess non-concessional contributions tax and amended assessments


Division 293 due and payable tax assessments and amended assessments

Division 293 deferred debt assessments and amended assessments


First Home Super Saver Scheme


Streamlining Superannuation

ReleaseAuthorities


Measures designed to stimulate the development of retirement products

Covers lifetime product initiatives such as deferred products and group self-annuities

Designed to provide retirees with greater choice and flexibility

From 1 July 2017 the government has removed the tax barriers and streamlined the process for product providers to deal with government agencies

Such products were previously required to make annual payments to the earnings on assets to be tax exempt

Treat the reporting of such lifetime products to be the same as other superannuation products

Total Superannuation Balance (TSB)

Transfer Balance Cap (TBC)

Contribution Caps


Innovative Retirement

Income Stream Products

2Budget Commentary

Tax highlights and summary from the 2018 Federal Budget

CommentaryFederal Budget 2018 Individuals

Business

Superannuation

Black Economy Measures

Post Budget Mutterings and Related Matters

IndividualsSeven-year Personal Income Tax (PIT) Plan to be implemented in three steps

Step 1: Low and Middle-Income Tax Offset to be introduced A Low and Middle-Income Tax Offset (LMITO) will provide a lump sum non-refundable tax offset

Assessed by the ATO and processed at tax assessment

Will apply to income years from 2018-19 to 2021-22 for taxable incomes up to $125,333

The LMITO will be in addition to the existing Low-Income Tax Offset (LITO)

Taxable Income LMITO

< $37,000 $200

$37,000 - $47,999 $200 plus 3c per $ above $37,000

$48,000 - $90,000 $530

$90,001 - $125,333 $530 less 1.5c per $ above $90,000

Step 2: Bracket creep relief for middle-income tax payersFrom 1 July 2018

the 32.5% tax bracket threshold will increase to $90,000 (up from $87,000)

From 1 July 2022

the Low-Income Tax Offset (LITO) will increase to $645 (up from $445)

LITO will be changed for incomes up to $66,667

the 19% tax bracket threshold will increase to $41,000 (up from $37,000)

the 32.5% tax bracket threshold will be further increased to $120,000 (up from $90,000)

Taxable Income LITO

< $37,000 $645

$37,001 - $41,000 $645 less 6.5c per $ above $37,000

$41,001 - $66,667 $385 less 1.5c per $ above $41,000

Tax Rate 2017-18 Threshold 2024-25 Threshold

Nil < $18,200 < $18,200

19% $18,201 - $37,000 $18,201 - $41,000

32.5% $37.001 - $87,000 $41,001 - $200,000

37% $87,001 - $180,000

45% > $180,000 > $200,000

Step 3: 37% personal income tax bracket removalFrom 1 July 2024

the 37% tax bracket will be removed

the 32.5% tax bracket threshold will increase to $200,000 (up from $120,000)

Essentially this leaves four (4) tax brackets as illustrated in the following table:

Medicare low-income thresholds will be increased from 1 July 2017

The proposed increase in the Medicare levy from 2% to 2.5% of taxable income that was to apply from 1 July 2019 will now not proceed

this will also affect other consequential linked tax rate changes such as Fringe Benefits Tax (FBT)

Increased to: Up from:

Singles $21,980 $21,655

Couples $37,089 $36,541

Dependent Child $3,406 $3,356

Single Seniors and Pensioners (SAPTO) $34,758 $34,244

Married Seniors and Pensioners $48,385 $47,670

Medicare Changes

Income Tax Exemption for certain Veteran Payments

From 1 May 2018 Supplementary amounts paid to veterans and full payments made to a spouse (or partner) of a deceased veteran will be exempt from income tax

This includes such payments as pension supplements, rent assistance and remote area allowances

Licence schemes of an Individual’s Fame or Image

This measure is intended to target the licencing of an Individual’s fame or image to other related entities such as a Company or Trust - often referred to as the fame tax

Income from that arrangement goes to the licence holder and can create opportunities to take advantage of differential tax treatments and avoided tax outcomes

From 1 July 2018 all remuneration including non-cash benefits resulting from the commercial exploitation of fame or image will be included as assessable income of that Individual

Research and Development Tax Incentive Changes

The Research and Development (R&D) Tax Incentive calculation will change for income years beginning on or after 1 July 2018

The threshold for claiming accelerated R&D Incentives will increase to $150m (up from $100m)

Some R&D changes have a differential application dependent on the company's aggregated annual turnover

Companies with an annual aggregated turnover of less than $20m(Smaller R&D claimant)

Companies with an annual aggregated turnover of greater than $20m

Business

Companies with Annual Aggregated Annual Turnover of less than $20m

Current R&D Incentive

A 43.5% refundable tax offset is available with a minimum eligible R&D expenditure of $20,000 per annum

Proposed R&D Incentive

A refundable tax offset of 13.5% above the company's corporate tax rate (CTR)

The proposed tax offset rate would remain the same at 43.5% for most entities

The newly defined Base Rate Entities (BRE) have a lower CTR and therefore have a tax offset of 41%

The maximum refundable tax offset will be capped at $4m per financial year

R&D tax offsets above the $4m cap can be carried-forward to future years as non-refundable tax offsets

Companies with Annual Aggregated Annual Turnover of more than $20m

Current R&D Incentive

A 38.5% non-refundable tax offset is available with a minimum eligible R&D expenditure of $20,000 per annum

Proposed R&D Incentive

Introduction of an entity R&D Intensity Percentage based on the amount of company expenditure spent on R&D

Four levels of non-refundable tax offset based on the R&D intensity percentage and the entities corporate tax rate

R&D Intensity% BRE offset% Std offset%

0-2% 31.5% 34%

2-5% 34% 36.5%

5-10% 36.5% 39%

> 10% 40% 42.5%

$20,000 Asset Immediate Write-off Extended

The Small Business Entity (SBE) instant write-off regime for assets less than $20,000 will be further extended for another 12 months

SBEs will get an immediate deduction for all assets costing less than $20,000 and installed ready for use on or before 30 June 2019

SBE Eligibility Criteria - covers over 98% of Australian Business

Annual turnover less than $10m

Mandates that all SBE assets be handled under the Simplified Depreciation Rules

Includes the instant write-off of Small Business Pool balances less than $20,000

The lock out laws which prevent SBEs from re-entering the pooling rules for five (5) years when they opt out will continue to be suspended until 30 June 2019

Division 7A Unpaid Present Entitlements Rule Strengthened

Division 7A of the Income Tax Assessment Act 1936 will be amended to clarify the circumstances regarding application to Unpaid Present Entitlements (UPE)

This integrity rule covers the UPE resulting in situations when a related private company hasn’t yet been paid a trust distribution as a beneficiary but has provided a benefit to its shareholder

This measure will ensure the value of the UPE is either:

repaid to the private company over time as a complying loan

or subject to tax as a dividend

Division 7A amendments are part of the reforms announced in the 10-Year Enterprises Tax Plan in the 2016-17 budget

The amendments will be deferred to take effect from 1 July 2019 so that all Division 7A amendments progress as a consolidated package

Deductions for Vacant Land to be Denied

From 1 July 2019 tax deductions will not be claimable for expenses associated with holding vacant land and any such costs cannot be carried forward to later income years

These measures will apply to land held for both residential or commercial purposes

Denied deductions such as borrowing expenses and council rates may still be used as part of the asset cost base for Capital Gains Tax (CGT) purposes on sale

The measure does not apply to land where an occupiable rental property exists or the land is used for business purposes such as primary production

This integrity measure will address the issue of deductions being improperly claimed for expenses such as interest costs where the land is not genuinely held for the purpose of earning accessible income

Small Business Capital Gains Concession for assignment of Partnership Rights

From 8 May 2018 (7:30pm AEST) the Small Business Capital Gains Tax (CGT) Concession will no longer be available to partners that assign their rights to the future income of a partnership

The SBE CGT concessions assist owners of small business by providing relief from CGT on the disposal of assets related to the partnership business

This integrity measure will clarify use of the Everett Assignment and the associated sale of the partnership assets for SBE CGT concession purposes

Everett Assignment - 1980 High Court decision regarding the assignment of partnership income to the wife

Some taxpayers were inappropriately accessing these concessions by assigning their rights to future partnership income to an entity without giving that entity any role in the partnership

Non-compliant Payments to Employees and Contractors

From 1 July 2019 business will no longer be able to claim deductions for payments to employees when the employer has not meet met their Pay as You Go (PAYG) obligations

These PAYG obligations include reporting or remitting PAYG to the ATO

These measures also cover the business deduction on payments to contractors subject to withholding

A business paying a contractor who did not provide an ABN must make a withholding at the top marginal tax rate

When this is not down correctly the entire payment is non-deductible

Significant Global Entity Definition

The definition of Significant Global Entity (SGE) will be amended to include members of large multinational groups headed by Private Companies, Trusts, Partnerships and Investment entities

The current definition encompasses only groups headed by Public Companies and Private Companies required to provide consolidated financial statements

This measure applies to income years commencing on or after 1 July 2018

This change will extend the application of the SGE information collection regime and ensure that the Commissioner will be able to monitor Australia’s multinational tax integrity rules

Multi-national Anti-avoidance Law (MAAL)

Diverted Profits Tax (DPT)

Tightening of Thin Capitalisation Rules

This change will ensure that the value of assets for Thin Capitalisation purposes will be aligned with the value included in the financial statements

Essentially this means that asset valuations used to justify debt deductions are robust

This measure applies to income years commencing on or after 1 July 2019 with transitional arrangements available for asset valuations made before 8 May 2018 (7:30pm AEST)

Foreign controlled consolidated groups who also control a foreign entity will be treated as both outward and inward investment vehicles for Thin Capitalisationpurposes

This ensures inbound investors cannot access tests that are only intended for outward investors

Tax Exempt Entity Loans

Tax exempt entities that become taxable after 8 May 2018 will not be able to claim tax deductions arising from the repayment of the principle on a concessional loan

Such deductions result from the complex interaction between the rules for Taxation of Financial Arrangements (TOFA) and the rules dealing with Deemed Market Values for Tax Exempt Entities

Concessional loans entered into by a tax exempt entity that has become taxable will be valued as if they were originally made on commercial terms

This integrity measure is designed to protect the future revenue base

Removal of Capital Gains Tax Discount for Managed Investment Trusts and Attribution Managed Investment Trusts

Managed Investment Trusts (MIT) and Attribution Management Investment Trusts (AMIT) will not be able to apply the 50% Capital Gains Tax (CGT) discount at the trust level

This prevents CGT discounts flowing through to beneficiaries who would not be entitled to the CGT discount in their own right

The change ensures that an investors income from MITs and AMITs is taxed correctly as if they had invested directly

This measure applies to payments made from 1 July 2019

Extension of Anti-avoidance Rules for Circular Trust Distributions

The anti-avoidance rule that applies to a Closely Held Trust engaging in circular trust distributions will be extended to cover Family trusts

Circular Trust Distributions occur where trusts are beneficiaries of each other in a round robin arrangement

The ATO can impose tax on such distributions at a rate equal to the top Individual Tax Rate plus the Medicare Levy

This measure will apply from 1 July 2019

Testamentary Trusts and Injected Assets

The Concessional Tax Rates available to minors receiving income from a Testamentary Trust will be limited to income derived from assets that are transferred from the deceased estate or the proceeds of the sale of those assets

Income received by minors from a Testamentary Trust is taxed at normal adult tax rates rather than the higher rates applying to minors

An injection of assets unrelated to the deceased estate into the Testamentary Trust could enable an inappropriate benefit from the lower tax rate

This measure clarifies the tax rates for minors and applies from 1 July 2019

Self Managed Superannuation Fund Membership

Self Managed Superannuation Funds (SMSF) will be allowed to have up to six (6) members

Applies from 1 July 2019

Self Managed Superannuation Fund Audit Cycle

Self Managed Superannuation Funds (SMSF) with a history of good record keeping and compliance will have changed annual audit requirements

SMSF trustees that have three (3) consecutive years of clear audit reports and timely lodgments will qualify

This change applies from 1 July 2019

Superannuation

Preventing Inadvertent Concessional Cap Breaches

Individuals whose income exceeds $263,157 per annum and who work for multiple employers will be able to nominate that wages from an employer are not subject to the Superannuation Guarantee (SG)

This change is intended to ensure that Individuals can avoid unintentionally breaching the $25,000 annual concessional contributions cap due to multiple compulsory SG contributions

This measure applies from 1 July 2018

Personal Contributions Deductions Integrity

Individual Income Tax returns will include a tick box for Individuals with personal superannuation contributions to confirm that they have complied with the requirements to submit a Notice of Intent (NOI)

The NOI is required when the taxpayer intends to take a tax deduction for the contributions

When no NOI is received by the superannuation fund no tax is paid by the fund but the Individual taxpayer has also taken the deduction against taxable income


Recent Retiree - Personal Superannuation Work Test

An exemption from the Work Test for voluntary superannuation contributions will be introduced

Currently the work test restricts the ability to make voluntary superannuation contributions for individuals aged 65-74 and working more than 40 hours in any 30 day period

The work test exemption allows retirees flexibility to address their financial affairs in the transition to retirement

The change applies to people aged 65-74 with superannuation balances below $300,000 in the first year the retiree does not meet the work test


Illegal Phoenixing and Black Economy Reforms

The government will reform the corporations and tax laws to provide regulators with the ability to deter and disrupt illegal phoenix activity

Illegal phoenixing involves the deliberate misuse of the corporate form

The package includes reforms to:

introduce new offences targeting those who conduct or facilitate illegal phoenixing

prevent directors improperly backdating resignations to avoid liability or prosecution

limiting the ability of directors to resign when this would leave the company with no directors

restrict the ability of related creditors to vote on the appointment, removal or replacement of an external administrator

extend the director penalty regime to GST, Luxury Car Tax and Wine Equalisation Tax

expand the ATO’s power to retain refunds where there are outstanding tax obligations

Black Economy Measures

Taxable Payments Reporting System Expansion

The Taxable Payments Reporting System (TPAR) will be expanded to include the following industries:

Security Providers

Investigation Services

Road Freight Transport

Computer Design and related services

These changes are in response to the Black Economy Taskforce findings which identified these industries as being at higher risk of non-compliance with tax obligations

The ATO will be providing a new online TPAR processing option to streamline manual reporting

This measure applies from 1 July 2019 with the first subsequent TPAR due on 28 Aug 2020

Large Government Contract Tenders

Business seeking to tender for large Australian Government contracts will be required to provide a statement of compliance regarding the status of their tax obligations

The proposal will apply to contract tendering over $4m (including GST)


Several Members of the House have indicated that they will vigorously oppose various budget matters and this could have a significant impact of the packaged nature of some measures

Kelly O’Dwyer, the Minister for Revenue and Financial Services, has announced the intention to provide a one-off 12 month amnesty starting 24 May 2018 for historical under-payment of Super Guarantee (SGC) - this is thought to be a pre-cursor to a stricter penalty regime following the introduction of Single Touch Payroll (STP)

Significant market commentary surrounding the proposed introduction of a $10,000 economy wide cash payment limit has been widely noted

An extension to the pension loans scheme was announced to provide pensioners over the age of 65 with a reverse mortgage of $11,799pa (for an Individual) using the equity in their own home

Provides an income stream with a 5.25% interest rate

Administered by the Department of Human Services

Post Budget Musing, Mutterings and Related Matters

Several changes will be introduced to cap and control various Superannuation Fund fees

Charge the ATO with managing the consolidation of Low Balance Superfunds

3% annual cap on passive fees for fund balance below $6,000

Removal on exit fees for all superfund accounts

Change the application of integrated Insurance options

The removal of Luxury Car Tax on the reimportation of vehicles sent overseas for refurbishment

From 1 July 2019 the treatment of GST on online hotel bookings will be treated the same for both domestic and off-shore agencies

The Civil Aviation Authority will be granted $3m to manage safety standards for both commercial and recreational drone usage

Also of interest was the announcement to provide the International Cricket Council (ICC) a five (5) year tax exemption for the Twenty20 World Cup being held in 2020

3PLS Review

Overview of the how, why and when of PLS to date plus what’s next

PLS Review• The Practitioner Lodgment Service (PLS) started to replace

the ATO's venerable Electronic Lodging System in early 2017

• PLS uses high security communication technology to send Standard Business Reporting (SBR) messages over the internet to the ATO's SBR End-point

• Messages are transported using the Hypertext Transport Protocol Secure (HTTPS) protocol and encrypted using Transport Layer Security (TLS)

• Essentially this is a more interactive technology environment as compared to ELS and will enable the ATO to further extend and enhance their interactive services

• This is a mandated change and all standard return lodging for 2018 will now be managed entirely through PLS

• Furthermore the ATO expect to retire the existing ELS service for all forms from 2017 onwards in December 2018

Lodgment Manager

Home Page

ATO PLSLodgment Manager Review

PLS is simple to configure and works in Terminal Server environments

May require Windows Firewall reconfiguration

Provides a simultaneous lodging solution

PLS Service availability and uptime has been variable

www.ato.gov.au/General/Online-services/System-maintenance/

Generally the migration to PLS has been very straight-forward

PLS provides the benefits of real-time lodging and subsequent portal updates

ATO Deeper Validation means that returns are being more rigorously checked

Ongoing service development will further extend and enhance the service capabilities

Lodgment Manager

Track the status of returns through the PLS workflow

Completed Clean Validation

Ready to Lodge Prepared for Lodgment

Transmitting Being transmitted by the MYOB PLS Service

Transmitted Received by MYOB

Lodged Lodged Return (Hidden by default)

Rejected Rejected Return

PLS Lodgment Flow

TRANSMITTED

PLSNew features

for 2018

PLS Lodgment Batch Management Provides a similar "batching"

capability to ELS

PLS Pre-fill

ATO PLS Pre-fill option for I Returns

PLS Lodgment Batch Management

Assigns a unique Batch ID during the lodging process

New Lodgment Batch Viewer Home Page

Date-driven real-time batch information status display

Option to print Combined Validation Report

PLSPlanned new

features

ATO Client Reports - expected release 2018 Q3

ATO Lodging Statistic Reports - expected release 2018 Q3

ATO EFT Reconciliation Report - expected release 2018 Q3

PLS Desktop Activity Statements - expected release 2018 Q4

Currently under development

Future extension

Integration of Online PLS Form lodging status to Desktop

Electronic Notices of Assessment

4ATO Pre-fill

A walk through the new ATO Pre-fill features and workflow for I Returns

ATO PLS Pre-fill for I Returns The I Return PLS pre-fill productivity feature was introduced in MYOB Tax 2017.3

Pre-fill is built around the ATO SBR online services technology

Replaces the previous Tax Agent Portal based approach and provides both extended and enhanced functionality

Note: Only I Return pre-fill data is available from the ATO for pre-filling

Uses an interactive pre-fill request and download option

Can process either for an individual client or for a selected client list

Clients must have a Tax File Number (TFN) assigned

Downloaded pre-fill reports are stored locally according to practice configuration

Integrates with MYOB Document Manager (DM) if installed

Simple point and click option to pre-fill downloaded data into tax returns

Returns must be rolled over and "Ready to Pre-fill"

ATO Pre-fill data cannot be edited but can be deleted at the individual schedule level

The ATO requires pre-fill data to be explicitly accepted

Each pre-fill item is considered to be a new line entry - not matched to existing data

Pre-fill data does not roll-forward - it is designed to be completely refreshed

ATO PLS Pre-fill Report

ATO PLS Pre-fill Data

Salary and wages

Private Health Insurance

Government payment

Employee Share

ATO interest

Bank interest

Dividends

Averaging - PP

Averaging - Div 405

Managed Fund

Higher Education

Pension - non super

ETP

Super income stream

Super lump sum

ATO PLS Pre-fill Status

Messages

Pre-fill Status Description

Not Requested No pre-fill download has been requested

Downloading Pre-fill download has been requested

Download error There was an error while requesting the pre-fill report

Received Pre-fill Report has been received

Pre-filled Tax return has been pre-filled

Import error There was an error while importing the pre-fill data

ATO PLS Pre-fill for I Returns

5Support Matters

What’s changed with your support options and a look at some common tax calls

Support MattersGeneral

Practice Backup Strategy

Installing updates

Not keeping up to date with MYOB Releases

Make sure you get the eBulletin

Read the Release Notes

Turn off Anti-virus during installation

Basic system navigation

Drop down menus

Home page features - Field Chooser, Re-order, Re-size, Sorting, Grouping

Practice Security - Tax Return Security

Failed Migrations

Migrations are a relatively straight forward project

But they do require a degree of technical expertise

There may also be wider implications such as PLS reconfiguration

MYOB have remote and online services available to assist

Interactive Voice Response (IVR) changes

MYOB has a program of constant service improvement

The IVR and associated queues will change with service requirements

Support Matters

The Top 3 Knowledge

Base Articles

How to restart the SBR Sender Service

MYOB Tax SBR Server Sender - runs on the server

Controlled through Windows Services Manager

Recommended: Set up a Desktop Shortcut

KB 38335

PLS lodging - Troubleshooting returns stuck as Transmitting or Transmitted

Knowledge Base article will assist with checking these returns

In some cases correction will require MYOB Support assistance

KB 38226

Machine Name not unique

This occurs in situation where the system has detected a workstation conflict

There can be various reasons for this situation

Terminal Server environments generally require specific launch configuration

KB 27473

Help and Knowledge

Base Updates

The Information Experience Team have been working through a major project to review, reformat and consolidate the Online Help and Knowledge Base articles

All articles are being reviewed

Anything no longer relevant for current usage has been deleted

Any duplication is being removed

Information has been extensively checked for accuracy

The articles have been reformatted for consistency

The project goal is the consolidation of the Help and Knowledge Base articles into a single self-service platform

Providing simplified access

Consistent searching experience

Improved search results

Enhanced presentation utilising collapsing menus

Support for additional information linking and embedding

Tax 2018 will include the new Help environment which will be extended to cover additional product modules over the coming months

F1 Help

Will continue to provide the consistent HELP experience

We have rebuilt the Knowledge Base

my.MYOB is still the access point

http://help.myob.com/wiki/x/MYHMAQ

http://help.myob.com/wiki/x/MYHMAQ

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FAQs from the Support Team

Distributing a Foreign Tax Credit (FTC) from a Trust return

Distributing an overall trust loss between trusts (V335 error)

Distributing a Foreign Tax

Credit from a Trust Return

Issue

When distributing a Foreign Tax Credit (FTC) via the <F4> distribution function, it does not populate the Foreign Income Tax Offset at Item 23 label Z

Impact

Overlapping of the FTC $1,000 rule for individuals

Solution

Modify the estimate generation by switching on the tax tables for the Trust and reverting the answers back when completed

Additional details are available in the Knowledge Base article KB 33905

Distributing a Foreign Tax

Credit from a Trust Return

1. On the Front Cover answer Yes to the question Is any tax payable by the trustee ?

2. Change Select applicable Tax Table to 9

3. Navigate to and click in item 23 label Z then press F4 to process the distribution

4. At the Distribution tab, complete the distributions for all beneficiaries

5. Finish by reverting the changes made at Steps 1 & 2 back to the original values

Distributing an overall Trust loss between

Trusts(V335 error)

Issue

Trust A has a capital gain together with a income loss and the overall position of Trust A is a gain

This gain is now being distributed to Trust B who has a capital loss situation greater than the gain being distributed from Trust A

The net result of the distribution will therefore be an overall loss situation for Trust B

Impact

Trust A has a capital gain together with a income loss and the overall position of Trust A is a gain

Validating Trust B will produce a V335 error

This is because MYOB Tax immediately offsets the capital gain against the capital loss and the validation check assumes that Trust B has only received a loss from Trust A

Solution

In Trust B remove the loss from item 8 and instead add the loss amount to the losses schedule


Trusts(V335 error)

1. Go to the Income tab Item 8 and update label R to NIL

2. On the Deductions tab at Item 25 enter NIL


Trusts(V335 error)

3. Create a BP Losses schedule

4. Include the income losses incurred this year at Part A

5. Complete the reconciliation at Part F

Place Holder Slide

6Dates

All the important dates for your reference

Important Dates

MYOB Tax v2018.0 software releaseTax 2018 will be released and available on my.MYOBfor download

Friday 22 June 2018

ATO ELS GatewaysWill continue to accept 2018 Activity Statements only

ELS Client Lists and EFT Reconciliation Report will remain available until

30 September 2018

ATO PLS LodgmentsWill accept 2018 tax forms from

Monday 25 June 2018

ATO Refund ProcessingTaxpayers should start receiving 2018 tax refunds from

Tuesday 17 July 2018

Getting AssistanceExtended

Support Hours

Extended support hours for the 2018 tax season

Monday to Friday8:30am - 7.00pm (AEST)

• 25 June 2018 to 10 August 2018

Saturdays 10.00am - 3.00pm (AEST)

• 30 June 2018

• 7 July 2018

Getting Assistance

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www.myob.com/AEforum

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www.myob.com/au/accountants-and-partners/support/end-of-financial-year

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http://www.myob.com/au/accountants-and-partners/support/end-of-financial-year

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